Overnight Equity Weakness Reversed!

CTAs continue to enter foray

Well that was an interesting trading day, Microsoft started things out in the Asian session early overnight with crappy forward guidance. Initially the stock was higher, but as reality set in the stock continued lower dragging the broader markets with it. MSFT dropped about $15 down to $231 area and the EU session took the cues to continue to hit the Nasdaq and SP500, that is until the NY open which promptly reversed course all day to the point that not only was MSFT nearly unchanged, but the SP500 ended the day basically unchanged at 4032 after a low put in down at 3963.25. The Nasdaq futures put in a low down at 11604.50 but ended the day at 11873.25 -36.25, a nice 270 handle rally!

Today we saw a decent 5YR auction and bonds were well supported most of the afternoon as the curve was a bit steeper across the board and bonds were well bid with a curious buyer all afternoon, moved the basis markets about 7 strong from the 2PM closing levels.

In regards to the overall equity tone, we talked a few weeks ago about a higher equity market dragging in the CTA crowd, and Nomura’s recent estimates clearly shows buyside allocations being put to work: